Posts Tagged ‘Green Marketing’

Green Marketing is Dead. Long Live Strategy and Marketing

Monday, June 20th, 2011

Noted green business journalist Joel Makower caused quite a stir when he published this article in May: “Green Marketing Is Over. Let’s Move On.” What Makower fails to do, as comments pointed out, is define what he means by “green marketing.”  This makes the article somewhat confusing because many of the things he points to as working are also marketing issues. Turns out that he’s describing green marketing communications, not the full marketing discipline. With this clarification, this article provides substance to the position we’ve taken on green marketing for several years.

I welcome the demise of obsession with green marketing communications.   No one is ever going to scale sustainability by trying to get people to buy green for green’s sake.  As I’ve discussed in previous articles, the people who will buy green for green’s sake are the innovator’s and early adopters of the industry. Everyone else buys for other reasons, primarily the utility of the product or service.

It’s my hope that as people recognize the limitations of so-called “green marketing,” they will rediscover the other 3-4 “P”s of marketing (depending on how you count them), will discover the value of strategy as a place to embed sustainability values into the core business rather than bolting them on through features-benefits descriptions.  According to Makower’s article, this *is* what’s working.  Let’s get to it!

The Spirituality of Strategy

Wednesday, September 15th, 2010

By Kathleen Hosfeld

It will seem oxymoronic to some to put the words spirituality and strategy in the same sentence. Spirituality of StrategyThe mainstream world of strategy and marketing is transactional and fast-paced, rather than reflective. Or so it would seem.  Let me paraphrase the four-point test from the strategy model we use in order to make more clear how an organization’s strategy design process touches the spiritual aspects of business decisions:

  • In what way do we create perceived value for our customers?
  • What value do we create that reflects the best of our collective gifts and intentions?
  • What is the unique value we can create in the market that no other company is as qualified to create?
  • Which types of value creation in which we engage give us an opportunity for positive impact in a wide variety of markets or settings?

Some of you might recognize the pattern of the four-point test of the core competence model in the questions above. This model, developed by Gary Hamel and C.K. Prahalad years ago, is an enduring model for breakthrough strategy and strategic innovation.

The first question probes the extent to which we are serving the market by offering something of real value. The second question looks at who we are together as a work community; is there a cohesive sense of identity and purpose that we share?  The third question points to the unique capability that each company has distinct from any another company; what is it that we can do together that no one else can? The fourth question tackles the scope of the firm’s vision; how far does it reach, and how might it change our market, our community, our world?

Why are these spiritual questions? Spirituality taps the fullest experience of what it means to be alive, and for many of us this is expressed in relationships.   These questions help us examine the strength of our relationships with ourselves (are we deeply in touch with and expressing the essence of who we are as individuals and as a company?) and others (are we using our gifts and strengths to benefit others as ourselves through either support or challenge?).

Spiritual does not mean airy-fairy and impractical. All four of these questions can be used to advance key performance indicators and other benchmarks that measure organizational performance and outcomes.  The difference is hitching the practical, financial and quantitative aspects of business to something larger, engaging with meaningful action, and allowing the firm to be drawn upward as a result.

Marketing that Fosters Trust: Strategies for Green Marketing and Beyond

Wednesday, August 11th, 2010

By Kathleen Hosfeld

Few companies argue that fostering trust with customers and other stakeholders is an important business task. Where there’s disagreement, however, is what specifically fosters trust, and the degree to which trust between customers and companies – particularly as it relates to green or sustainability claims – is suffering.

Our academic partner, Jenny Mish, PhD., assistant professor of marketing at Notre Dame, explored this and other questions in her doctoral research. Her study, which explored food standards and sustainability, resulted in insights about marketing behaviors that foster trust.

Mish interviewed a wide variety of individuals representing institutions engaged in developing or promoting the use of market-based product standards, such as Fair Trade or organic, that specify reductions in negative environmental or social impacts.  She spoke with people in large corporations like McDonald’s, in government such as the United States Department of Agriculture, and  smaller, grassroots organizations such as the Portland, OR-based Food Alliance.

The spectrum of types of trust she found span from the very impersonal and institutional, to the highly personal, local and dare we say “intimate.”  Large corporations tend to look primarily at repeat purchase behavior to evaluate the degree of trust they’ve engendered with customers. Some companies evaluate trust on the basis of their ability to fulfill key expectations of sustainability performance. Still others evaluate trust on the basis of direct, personal interactions with customers, and the degree to which they had actual contact with customers and other stakeholders.

Her findings suggest that marketers may be able to foster trust three different ways:

Preserving the Integrity of the Brand: The least personal form of trust is embodied in the brand attributes that create a predictable customer experience. This is true even when the context is not sustainability or green attributes.  This calls for organizational and channel alignment to fulfill brand promises consistently, which means full commitment to green or sustainability standards…not merely claims that show up in features and benefits.

Compliance with a Market-Based Standard: A company’s ability to merit certification such as the USDA’s organic standard or Fair Trade, creates a type of performance contract with customers that fosters trust. Marketers may encourage their organizations to qualify for certification, but ultimately this will require cross-functional collaboration to bring operations into compliance. Standards that inspire trust are those that are either objectively evaluated (by government or third-party) or that are developed and supported by a wide coalition of contributors/stakeholders.

Designing Highly Personal Forms of Contact with Customers: A company’s ability to deal directly and personally with its customers, such as “meet the farmer” programs, can foster the most personal type of trust.  These programs are common in “local” exchange relationships, such as those formed at farmer’s markets.

One implication of the study, as I see it, is that human interactions (personal) are where trust can be lost altogether, or maintained in either an impersonal or highly personal and reciprocal manner. Mish’s study was not designed to explore trust as engendered by the sales process, but we know from other experience that the quality of those interactions also impact on consumer perceptions. While they make good marketing sense, authentic interpersonal relationships are usually not driven by marketing goals. They usually reflect a sense of “this is the right thing to do regardless” in the company culture, as is the case with local relationships described above.  They manifest from the shared values of everyone in the company.

Ultimately fostering trust is not a matter of choosing between these forms. It’s bringing all types of trust-fostering practices to the marketing agenda. The assumption is that if the organization is large, then personal interaction is not possible.  If we believe, however, that it’s the right thing to do, then it becomes an opportunity for innovation. There’s the marketing challenge — creating trust-engendering relationships between human beings on both sides of the exchange process, regardless of company size.

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Jenny Mish’s dissertation is “Centralizing and Decentralizing Forces in the Development of Sustainable Markets: A study of Food Product Standards.” It was published in 2009, by the University of Utah.

Crossing the Chasm of Sustainability

Friday, August 6th, 2010

A Theory, That is Mine*, About Mainstreaming

*That builds on someone else’s theory

By Kathleen M. Hosfeld

Imagine a bell curve (or Ann Elk’s theory of a brontosaurus) which is very thin at one end, much, much thicker in the middle, and then thin again on the other end.  On the far left point is a small group called “innovators.” To the right of the innovators are the “early adopters.” In the much, much thicker part we find first the “early majority.” As the thicker part begins to decline again we find the “late majority,” and finally at the thin-again part we have the “laggards.”

You may have heard the term “crossing the chasm” and wondered what it meant. It’s an insight that builds on the bell curve described above, which was the work of Everett Rogers , author of “Diffusion of Innovations.” Geoffrey Moore, who penned the book “Crossing the Chasm,” used Rogers’ work to help market new  technology. Moore’s book centers on a key insight that applies to many types of change, including – my theory — sustainability in business.

Innovators snatch up new technology even before it comes on the market. Moore says they do this because “technology is a central interest in their life.” Early adopters, like innovators, are able to quickly perceive the potential benefit of new technology for their lives. They look to innovators as guides for what is worth trying.  The early majority also relates well to technology, but tends to be more selective. Its members need references and proof of concept before they invest. The critical point Moore highlighted is that winning the early majority is the key to profit and growth. Yet, insofar as many technology firms are made up of innovators and early adopters, it’s often hard for them to relate and sell to those who don’t share their passion.

Proponents of sustainability may face a similar challenge. The innovators – the Body Shop, Ben & Jerry’s, Tom’s of Maine – and locally Harriet Bullitt’s Sleeping Lady Mountain Retreat – were those for whom sustainability was a central interest of their life. They inspired the early adopters — Seventh Generation, Fetzer Wines, Whole Foods,  and others  –   many of which are now at scale and thriving. The next step beyond the second wave is to increase sustainability in traditional firms – to create the early majority.

But watch out for that chasm. The next step is a doozy. As Moore points out, a wide gulf separates the first two groups – innovators and early adopters – from the early majority, and the gulf has to do with motivation.  Innovators and early adopters love sustainability for its own sake. The terminology they use is “because it’s the right thing to do.” They want the potential early majority to love sustainability the same way they do, but the early majority doesn’t share their passion. As Moore says in his book, innovators and early adopters want revolution; early majorists want evolution.  They want proof that something works.  The chasm is built on these differences. To further sustainability, we need to find a way to bridge the chasm.

Three things will help:

Discernment. Companies that are just starting out are not going to be exemplary. They’re going to start small. The business community and media need to encourage nascent attempts and not crush them with premature accusations of greenwashing.

Empathy. A colleague of mine recently started a Seattle-based solar nonprofit. She came from a traditional business background but had an infectious passion for evangelizing solar energy. Members of the green community to whom she reached out for help treated her like an outsider.  The ability to take the perspective of others, understand their  frame of reference  is a critical success factor for creating change.

Experience. The early majority cares about what works in operating a business. The motivational bridge is the business case. In this regard, the best thing innovators and early adopters can do is share their stories of achieving and sustaining their own profitability, and how sustainability contributed to their success.

In a recently released MIT Sloan Management Review, most of the 1,500 executives interviewed didn’t have a business case for sustainability in their organizations.  Most said sustainability initiatives in their firms were a response to regulatory pressures. Regulation plays a crucial role in catalyzing change, but ultimately it only goes so far. Winning hearts and minds is the key to sustainability adoption, and that begins with meeting and respecting people where they are.

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Kathleen Hosfeld (Ms.) is a strategy and marketing consultant. She has a second theory.

More research supports the business case for ethics, responsibility,”betterness”

Friday, May 21st, 2010

Terrific blog post at Harvard Business Review  by Umair Haque who is Director of the Havas Media Lab  saying the proof of the benefit of responsible business is in. Wait too much longer for more proof and the responsible businesses will have eaten your lunch. Statistics he cites are:

  • Ethisphere Institute: In 2008, ethical leaders outperformed the growth of the S&P 500 by 40%. In 2009, again. In 2010, by 35%.
  • CSR Magazine found a shareholder value performance gap of about 10% between, for example, the most and least transparent companies.
  • SRI Research finds that the mean Market Value Added of the top 100 Corporate Citizens is $36 billion, more than four times the Mean Market Value Added of the remaining companies — which is less than $8 billion.
  • Berkeley’s Haas School of Business: Study found that companies high in social responsibility had significantly higher profit margins, returns on equity, and returns on assets.

What type of behavior characterizes these types of companies? It’s important to note that these are self-regulated practices of companies that take responsibility for relationships with and impacts on a variety of stakeholders, and incorporate an active, conscious commitment to the public interest (versus self interest alone) in their decision-making.

For additional details see the entire blog article here.

Stakeholder Marketing Report: Examining models, dynamics and practices

Wednesday, May 12th, 2010

By Kathleen Hosfeld

The Journal of Public Policy and Marketing released a special issue devoted to stakeholder marketing this month, which among other things, features an article by our academic partner Jenny Mish, professor of marketing at Notre Dame, with her colleague Debra Scammon.

As the journal has limited visibility with people in business and non-profits who engage with stakeholders, I’m reporting here on some of the ideas that have the most applicability to day to day practice.

What is Stakeholder Marketing?

Stakeholder marketing is an approach to marketing that examines the impact of marketing on stakeholders other than the customer.  Our short-hand description is that it is about “marketing with rather than marketing at stakeholders.” It seeks to partner and collaborate with stakeholders in the creation of value for the company, its customers and other stakeholders. One article in the special edition, “Stakeholder Marketing and the Organizational Field,” says that research demonstrates a strong business case for responding to stakeholder issues efficiently. Among the benefits are improved financial performance, greater stakeholder identification with the firm, and stronger stakeholder support.

The ideas from this special edition, combined with my own research, leave me with two observations on the current state of stakeholder marketing:

Best Practices Not Yet Clear

First, the primary obstacle to the adoption of stakeholder marketing it that it does not lend itself to tactical considerations as easily as green marketing, social media marketing, relationship marketing or any other similar approaches. These other practices often comprise a set of tools and tactical strategies that can captured and shared. So far, stakeholder marketing has not been reduced to a checklist of best practices. These articles, rather, describe an intention. One essay suggests that stakeholder orientation is best represented in a definition of marketing management. As Jenny’s article indicates, stakeholder marketing begins with a set of principles rooted in values, which then inform the culture of the firm, which then informs marketing practice.

Jenny’s article actually goes farthest toward identifying practices that show up in a stakeholder oriented approach to marketing. Among them:

  • Approaching promotion and sales from the perspective of educating consumers about their choices rather than persuading them or seeking to control their behavior in favor of the firm’s objectives.
  • Engaging customers as partners in creating value for other stakeholders
  • Giving away innovations and market intelligence in service of improving the overall well being of the industry or market.

Marketers alone are not organizationally empowered to implement these practices.  More so than other marketing approaches, stakeholder practices must be supported from the top and must be coordinated across functional boundaries throughout the company. This leads us back to the role of marketing management as key in implementing stakeholder marketing.


How is Stakeholder Marketing Different From Stakeholder Engagement?

The second takeaway is that this edition does not yet answer the question “How is stakeholder marketing different from stakeholder engagement?” To answer this will require comparing companies’ stakeholder engagement or Corporate Social Responsibility (CSR) programs with their marketing strategies, taking into account all aspects of the marketing mix: product/service, pricing, distribution/sales, and promotion. Where are the linkages, overlaps or gaps?

Over the last several months I have contacted a number of well-known companies that I perceive to be practicing aspects of stakeholder marketing. Unfortunately, they don’t recognize their actions as such. They are more inclined to say that their CSR programs have elements of customer engagement. Even Timberland, whose stakeholder initiatives have been integrated into aspects of marketing and promotion, declines to call what they do stakeholder marketing.

It may well be that in many companies a stakeholder orientation in marketing will come from gradual encroachment of CSR initiatives.  As long as companies reinforce short-term thinking among marketers through mandates on measurement and quarterly financial goals, marketers will understandably resist embracing stakeholder methods which are often long-term in nature and difficult to measure – even though enhanced financial performance may be the ultimate outcome.

In the following series of articles, I’ve taken some of the topics raised by the authors in this special edition and provided brief summaries of findings that I feel are the most practical for those who manage marketers or have strategic oversight on a firm’s marketing.

Evolution of the Marketing Orientation – Researchers propose that stakeholder orientation is the next evolution in what began as a product orientation and evolved next to a market orientation.

Stakeholder Practices of Triple Bottom Line Firms – What does stakeholder marketing look like? Exemplary Triple Bottom Line firms provide the most insight and examples.

Like it or Not: Dragging Companies into the Stakeholder Perspective — Market events often trigger stakeholder activism that forces companies to shift from stakeholder management to stakeholder engagement.

Social Networking Taps the Creative Potential of the Stakeholder System — Social media marketing technology gives companies ways to manage stakeholder ideas and input.

Copies of the Journal of Public Policy and Marketing are available from the American Marketing Association. Purchase requires a subscription, which for individuals costs $90. The Journal publishes twice a year. Digital versions are available, but only to subscribers. Additional Information is available here .

If you are interested in integrating stakeholder strategies into your own marketing programs or strengthening stakeholder relationships in other ways, please contact us.

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This series of articles is dedicated to my beloved friend Coffee, with whose help they were written.

From Markets to Stakeholders: The Evolving Paradigm

Wednesday, May 12th, 2010

This article is one in a series of reports about the Spring 2010 Journal of Public Policy and Marketing special edition on Stakeholder Marketing. See an introduction to and a summary of our coverage of this edition here.

By Kathleen Hosfeld

In an article called “The New Marketing Myopia,” authors N. Craig Smith, Minette E. Drumwright, and Mary C. Gentile suggest that a stakeholder perspective is the next step in a progression that began with “product orientation” and evolved to “market orientation.” Building on the insights of Theodore Levitt’s landmark essay “Marketing Myopia,” originally published in 1960 in Harvard Business Review, the authors say that a stakeholders orientation in marketing will help prevent companies from relying too heavily on products or services that may come under regulatory or other scrutiny, or fall out of step with mainstream values.  Another article in the Journal’s special edition, “From Market Orientation to Stakeholder Orientation,” by O.C. Ferrell, Tracy L Gonzalez-Padron, G. Tomas M. Hult, and Isabelle Maignan, further develops the this idea.

A product orientation is internally focused on selling what one can/wants to make. A market orientation shifts to an external assessment of what customers need/want, and what competitors provide. A stakeholder orientation would also be externally focused, including other voices beyond customers and competitors, those advocating for longer-term, ethical, social, environmental or cultural issues.

The New Marketing Myopia article provides examples of food manufacturers and retailers who trade on the short-term desires of children for junk and fast food, and US automakers catering to the desire for gas-guzzling SUVs while disregarding signs of increasing regulatory pressure for more fuel-efficient vehicles. Stakeholders have lobbied both industries for years.  Automakers in particular have paid a price for ignoring stakeholder concerns.

The authors make the point that a market orientation, because it looks outward, has the potential to more easily evolve into a stakeholder perspective. The chief difference is that market orientation tends to ultimately prioritize customers and competitors over other stakeholders, whereas stakeholder orientation seeks to manage to all stakeholder interests simultaneously.

The original “Marketing Myopia” offered inspirational examples of how a market orientation expanded possibilities for long-term organizational evolution – reframing the core business from specific products which may only have a market for a decade or two to a customer need that might be reinterpreted over many decades.  It expanded trains to transportation, or silent films to film and video entertainment.

The authors suggest that stakeholder orientation can help companies “develop foresight regarding the markets of the future.” However, they provide no examples of how companies have thrived by doing so. Rather the stakeholder orientation as described here serves as a constraint – what one should not or cannot do – rather than something that broadens strategic options.  This does an injustice, I believe, to the stakeholder concept, which by way of its expanded systems view and the latent creativity present in the stakeholder system itself should similarly explode strategic options.

I wanted the authors, particularly of the New Marketing Myopia article, to cite examples of the generativity fostered by the stakeholder perspective. In some situations the stakeholder perspective might offer an expanded view of customer needs—from junk food to youth nutrition, or from SUVs to transportation solutions.  In others, it might show how companies and customers can create new benefit for other stakeholders while enhancing value creation for themselves. Or, it may simply mean meeting the same customer need but from within a business model or operational system that has been redesigned to respond to issues of ethics and sustainability.

Significant change is motivated by a compelling future.  I believe there is a compelling business case for adopting a stakeholder orientation in marketing. The authors of both these articles have not made that case.

Stakeholder Practices of Triple Bottom Line Firms

Wednesday, May 12th, 2010

This article is one in a series of reports about the Spring 2010 Journal of Public Policy and Marketing special edition on Stakeholder Marketing. See an introduction to and a summary of our coverage of this edition here.

By Kathleen Hosfeld

It’s virtually impossible to be a Triple Bottom Line business without practicing stakeholder marketing.  Adding social and environmental outcomes to the traditional financial bottom line almost invariably involves engagement with stakeholders other than customers, employees and owners.  As a result, Triple Bottom Line firms are a source of insight concerning what stakeholder marketing looks like.

Hosfeld & Associates’ academic partner, Jennifer Mish, Ph.D., a professor of marketing at Notre Dame, contributed the article “Principle Based Stakeholder Marketing: Insights from Triple Bottom Line Firms,” with co-author Debra Scammon to the special edition of the Journal of Public Policy and Marketing. The article is based on her doctoral research of firms who had operated with at least two bottom lines for at least 15 years and three bottom lines for at least 5 years (some had done so for more than 30 years).

Such firms inherently recognize the interconnectedness of stakeholders, what we call “taking a systems perspective.” Moreover they are committed to acting in service of the well being of the system as a whole. This translates to a commitment to transform industries and institutional norms, reinventing how business in their industry gets done, and tending to the needs of the weakest or most vulnerable members of the system.

The firms Jenny interviewed use value propositions in a unique way. In traditional settings, a value proposition is used to clarify the benefit created for a target customer.  The value propositions adopted by these Triple Bottom Line firms however define how the company and its customers together will create benefit for other stakeholders in the system (for example, offering a recycling program that helps them co-create benefit for the community and the environment).

Jenny’s article describes three elements of a Principle-Based Stakeholder Marketing Model:  1) a set of principles which support  2) the organizational culture which then in turn supports 3) specific stakeholder marketing practices.  The practices include 1) generating stakeholder-related intelligence,  2) disseminating the intelligence, and 3) responding to the intelligence.

Her article includes implications for public firms, some of which apply to many organizations – public, private or non-profit — that may be seeking to adopt a stakeholder perspective. A stakeholder orientation will increase the complexity of decision-making, may be difficult to measure, may unsettle single-bottom-line expectations, may expose the firm to reputation risks, and may challenge perceived legal constraints.

This article brought me back to another in the Special Edition, an essay by Gregory T. Gundlach and William L. Wilkie on why the term “stakeholder” was omitted from the latest iteration of the American Marketing Association’s definition of marketing in 2007. The essay makes the point that stakeholder marketing is less a set of specific tactical practices – like green marketing – and more a marketing management perspective or a marketing philosophy.   Jenny’s article may leave the practitioner hungry for answers to the question “How do I do stakeholder marketing?” Yet, it rightfully sets the context for how marketing and other executives should think about marketing from a stakeholder perspective.

Like it or Not: Companies Dragged into the Stakeholder Perspective

Wednesday, May 12th, 2010

This article is one in a series of reports about the Spring 2010 Journal of Public Policy and Marketing special edition on Stakeholder Marketing. See an introduction to and a summary of our coverage of this edition here.

By Kathleen Hosfeld

While some companies step into a stakeholder orientation by choice, others find it forced upon them by stakeholder activists.  In “Stakeholder Marketing and the Organizational Field,” by Jay M. Handelman, Peggy H. Cunningham and Maureen A. Bourass, the authors begin with the story of Starbucks’ capitulation to human rights, environmental and nongovernmental organizations’ demands to carry fair trade coffee. Rather than settling the issue, this agreement unleashed further demands from the activist community. As stakeholder dynamics accelerated, Starbucks was forced to move from a position of trying to “manage” stakeholder issues and perceptions to a stance of collaboration.  By building partnerships with activists, the authors say the company achieved a degree of legitimacy that “mitigated” further attacks.

The complexity and rapid evolution of stakeholder demands, as demonstrated in the Starbucks example, can outstrip capacity to respond through what the authors call a “strategic” and what I would call an issues-management approach. As a result companies are forced to recognize their place in a field, which the authors describe as a community of organizations and stakeholders – marketers, consumer activists, government, professional and trade associations, and special interest groups.

In order to respond to stakeholder demands, Starbucks was forced to engage with members of the field, instead of managing them. They had to act as one of several constituents in network of embedded relationships.  The authors describe similar dynamics in the food retail business during a period of high inflation, when the industry fought stakeholder influence, and compared it with the same industry’s response to challenges between 1988 to 2005 (e. coli outbreak, 9/11 and childhood obesity) in which members engaged with stakeholders. As a result of engaging, food retailers profited, and found ways to leverage events or issues into marketing opportunities (such as appeals to patriotism during the aftermath of 9/11).

The authors make the point that as market and economic forces trigger stakeholder activism, conflicts between activists and the companies they target are based in ideology. Conflict occurs when companies stand solely for their own interests, while activists and other external stakeholders advocate for those they see as vulnerable – consumers, environment, social groups, etc.  Parties that begin to see how their own interests are aligned or compatible can bring resolution to issues more efficiently.

The article concludes with recommendations to carefully monitor trigger events that lead to stakeholder activism, to monitor the firm’s own institutional (social, economic and financial) capital relative to stakeholders, and to be conscious of the ideological assumptions that inform the response to stakeholders.

Social Networking Taps the Creative Potential of the Stakeholder System

Wednesday, May 12th, 2010

This article is one in a series of reports about the Spring 2010 Journal of Public Policy and Marketing special edition on Stakeholder Marketing. See an introduction to and a summary of our coverage of this edition here.

By Kathleen Hosfeld

Bhaskar Chakravorti, a senior lecturer at Harvard University and a partner of McKinsey & Co. writes in his article “Stakeholder Marketing 2.0” about one contribution that social media marketing can make to stakeholder commitments in marketing.  Marketing with customers rather than at them is one of the paradigm shifts that occur in the movement to a stakeholder perspective.

In a traditional setting, he writes that “the intended targets (customers) did not have the opportunity to interact with decision makers; provide feedback; and influence the product, the experience or the brand in an ongoing manner ….Consumers were downstream participants and suppliers, partners or employees played their respective roles upstream.”

What social media marketing tools allow companies to do is to create manageable forums for interaction – what Chakravorti calls “harnessing distributed intelligence.”  Specific examples of “crowd sourcing” that he cites are Dell’s Idea Storm for external stakeholders and EmployeeStorm for internal stakeholders, Starbucks’ MyStarbucksIdea.com, Mujii Awards and Staples Invention Quest.

Chakravorti describes five characteristics of desirable social network solutions for stakeholders – by which he means primarily customer and employee stakeholders. Chief among them is an emphasis on encouraging diversity of participation, making the decision-making model for the company clear in the design of the system, and preventing the potential for manipulation such as minority coalitions campaigning to create greater weight for their ideas in the system.

Chakravorti notes that research has not yet proven that utilization of these ideas results in better financial performance or enhanced stakeholder marketing outcomes. Given the overwhelming curiosity that business has in social media networking, I doubt that this caveat will deter any company of a size from investing – and perhaps considerably — in designing social media programs like Starbucks’, Dells’ and Staples’.